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August 27, 2013

Marketers Not Sure Social Media Really Works

Still, many are increasing marketing budgets for social media

Marketing executives are struggling to show the value of their social media marketing, according to a survey conducted by a Duke University professor.

Christine Moorman, senior professor of business administration at Duke University’s Fuqua School of Business and director of The CMO Survey, polled more than 400 chief marketing officers to get their feelings on how well social media is serving their marketing plans.

Almost half of respondents said they haven’t been able to show that their marketing efforts on social media networks have had any impact.

Just 15% of respondents said they had a seen a measurable impact from their social media marketing expenditures. More than a third said they had a good idea of the qualitative impact, but not the quantitative impact.

In spite of limited results, if any, respondents said they would more than double their overall social media expenditures over the next five years, from 6.6% of their marketing budget to nearly 16%. Currently, marketing executives allocate about 5.5% of their marketing budget to analytics tools, the survey found. Respondents said they anticipate increasing that allocation to nearly 9% over the next three years.

However, while this would indicate marketers recognize the importance of measurable data, just 29% of marketing projects are using analytics, down from 35% last year, according to the survey.

Part of the problem may be that marketers are having trouble measuring the impact of their marketing in general, not just social media. Only a third said they could quantitatively show how well their marketing was working.

“Marketing leadership requires that CMOs offer strong evidence that strategic marketing investments are paying off for their firms in the short and long run,” Moorman said in a statement. “CMOs will only earn a ‘seat at the table’ if they can demonstrate the effect of their marketing spend.”

Marketers are optimistic about the economy in general, the survey found, rating their level of optimism at 65.7 on a 1-to-100 scale, and almost half of respondents said they were more optimistic than they were last quarter.

Just 11% of respondents noted they worked in the banking, finance or insurance industry, but of that small group, 57% said they haven’t been able to show whether their social media marketing has made any difference to their business. Almost 5% of their marketing budget currently goes to social media, an allocation that will increase to 7% over the next 12 months and 12% over the next five years.

In the banking, finance and insurance industries, 68% of respondents said they were more optimistic about the economy overall, and 54% of respondents said they were more optimistic than they were last quarter.

Fifty-five percent of respondents in the banking, finance and insurance industries, said their customers’ top priority over the next year was building a trusting relationship, followed by low price (36%). A quarter of respondents said “excellent service” was their customers’ No. 1 priority.